A Democrat-led bill that would double the amount of state funding for affordable housing is gaining momentum in the state Assembly.

House Bill 1228, sponsored by Reps. Shannon Bird, D-Westminster, and Brianna Titone, D-Arvada, was approved by the House Finance Committee on March 22 and now heads to the Appropriations Committee. It would increase the amount of available Affordable Housing Tax Credits from $5 million to $10 million annually for the next five years.

“We need to help ease the housing crunch. This bill will help seniors and hardworking people across our state,” Titone said in a March 22 statement. “Access to affordable housing can help grow the middle class and our economy.”

Colorado's Affordable Housing Tax Credit program was originally established in 2001. It's modeled after the federal Low Income Housing Tax Credit program, created in 1986 under President Ronald Reagan's administration. In return for providing capital for affordable housing developments, investors who purchase the credits receive a dollar-for-dollar break on their taxes.

The state's program was later renewed in 2014 and 2016, and most recently 2018, with legislation that extends it through 2024.

Since 2015, the state Affordable Housing Tax Credit program has created more than 4,700 affordable units and generated $1.9 billion in economic impact, according to the Colorado Housing and Finance Authority (CHFA), which supports the bill.

CHFA awards both state and federal tax credits to affordable housing developers that meet stringent application requirements and respond to a demonstrated need.

Combining state tax credits with 4-percent federal tax credits in the same application cycle has made the state credits about as competitive as the 9-percent federal tax credits, which are allocated in a separate application cycle, says Steve Johnson, CHFA's community development director. Traditionally, the 9-percent federal credits have been more competitive because they provide a deeper subsidy.

Currently, only about one in three projects that apply for tax credits through CHFA end up getting them, Johnson told the Indy in early March.

The investment necessary just to apply can be staggering for developers, especially nonprofits. Beth Roalstad, the executive director of housing nonprofit Homeward Pikes Peak, said pre-development costs for the nonprofit's permanent supportive housing project had already amounted to about $50,000 before the application was submitted to CHFA. She learned in March that the project would not be awarded tax credits due to a technical error in the application.

Roalstad plans to reapply in June, this time for the 9-percent federal tax credits.